Tale of two cities

For me John Tory will forever live as a disembodied voice coming from my chunky ‘90s cell phone. Tory was running the backroom election campaign for Prime Minister Kim Campbell (remember her?) and I was a cabinet minister traveling the country trying to save a sinking Conservative ship.

“But John,” I argued, “this is a disaster. You’ve gotta pull that ad. It’s ugly, crass and pissing people off.”

But he refused. The ‘face’ TV spot continued to air for days more, showing close-ups of Liberal leader Jean Chretien’s puss, contorted, drawing undue attention to his mild deformity. Almost from the moment it was first broadcast, phones lit up across Canada (and in my riding) with people expressing disgust. The needle was pushed for many from ‘undecided’ to ‘anybody-but-a-Tory.’

On election night the Conservative vote collapsed, with the party seat count dropping from 156 to 2. So long, Kim. The Libs romped to majority government. Among the casualties was me. I got the third-highest vote count. Close, no cigar. And thus I went on to become a billionaire blogger spending his nights fighting anonymous xenophobes, dissing hipsters and making fun of wrinklies and realtors. What a career path.

Well, John Tory survived, because he had nothing to lose. Today he’s still a political force, now running Toronto (scene of today’s tragic event). This week he gave a speech revealing the big thrust of his campaign for re-election. No surprise. It’s affordable housing.

Well, notice a trend here? Provincial and civic governments in BC and Ontario are obsessed with real estate, and have dragged the feds into the fray. The rumours are that Tory’s bid for prolonged power will involve a GTA copy of Van’s ridiculous ‘empty house tax’ and perhaps even a version of the BC speculation tax. It’s all part of the Moister Politics – catering to the huge Millennial cohort where the meme is that Boomers stole all the houses (and the good jobs) and need to be spanked. Of course Ontario also has an anti-foreign-buyer tax, which no statistical base to justify it. But there ya go. In public life perception is reality. Just ask Chretien.

Meanwhile there’s an elephant in the room. Doug Ford, combative brother of the new-deceased rebel, crack-smoking mayor Rob, is leading in the provincial polls and might well be premier by the middle of June. He’s a rabid right-winger, at least in fiscal terms, and says he’d scrap the 15% go-home tax as discriminatory and ineffective. Barring an asteroid strike on his Escalade, that’s probably going to happen.

The impact? Bullish.

Remember ‘Capitulation Week’ (not my descriptor) recently on this pathetic blog? That’s where I underscored several GTA hoods in which 25-30% price declines had occurred and sellers were forlorn, lonely and unloved. A great example came with our heroic/hated blog dog Derek who sold for $2.25 million to buyers who walked (and got sued & lost), then sold again months later for $1.7 million in a changed market.

Anyone who thinks these price drops will double over time – that houses in 2020 will command half what they did in 2017 – is being unrealistic. It’s not happening in the GTA. If Ford is elected, locals might even expect a mini-Trump effect, with renewed buyer confidence and another headlong plunge into the debt pool. It’s hard to predict sentiment, but a year from now lots of people may regret not having tried a good vultch in April. Remember, a 30% decline in prices wipes out a 50% gain.

But I’m starting to have serious second thoughts about YVR and the LM. All of BC, in fact. Yesterday’s blog some hard numbers on current sales, some historical context, then 200 hysterical comments from NDP supporters who crave seeing my head on a stick outside the Vancouver Art Gallery. So many people have swallowed the ridiculous line that higher taxes will reduce house prices by 60%, restoring affordability to the homeless masses who will flock in and buy.

None of that will happen. Yup, the market will croak, sales will crater. Thousands of people will be forced into underwater real estate, owing more than their homes are worth. But cheap houses will get more costly with higher demand. Unaffordable ones will drop hard, but still be out of reach. Families, meanwhile, will be struggling to borrow and buy in a declining economy, where lenders are far more skittish.

More profoundly, the reputation of BC within the federation is starting to stink. The war with Alberta is incredible and bitter. The collapse of the Trans Mountain pipeline project has led to hostility in the oil patch, and even a threat that the cowboys will turn off the energy taps to the greenies. The BC ‘speculation tax’ left coast politicians have imposed on all other Canadians who have owned property in that province for years or decades is seen as capricious, unjustified and punitive. Which it is.

These other Canadians are not hurting BC, but rather helping support it. They pay school taxes but send no children. They pay property taxes year-round but live there far less. While in the province they spend heaps of money earned elsewhere, providing income and jobs for their neighbours. These are the kind of people American states court. Now, at the stroke of a pen, they face a retroactive tax that is, in many cases, massive. Just like the anger and anti-BC sentiment it is creating.

Add it all up. Money’s heading East.

167 comments ↓

How anyone can prognosticate on the future baffles me as I’ve watched this blog over too many years. The only thing that could be viable is the return to the long term trend line, which is a jaw dropping cliff face away from its lofty perch. If locals can’t afford local houses without gutting their finances then I just don’t understand housing’s primary purpose…

We sold our home in North Vancouver just under 2 years ago for $2M. It went back on the market shortly afterwards and only just sold for $1.8M. All in, that’s about a $360K loss over 2 years. If you take that at marginal tax – let’s be kind – and say that’s around $600K in pre tax income for shoppers and earners in that range. If you consider these dear folk could save a few thousand dollars a month, I will leave it to you to work out the pain and realism of the fact that $2M homes are unrealistic and need to come down.

I was on Zolo a few days ago looking at homes in the Edgemont area for $3M to $5M with mortgages of $12K to $18K per month. For a box built to the edges of the property. Why would you possibly waste your time, money and life paying for such a thing – even if you had that money.

It will not be so bad. The Ploz is on our side. Interest rates will stay as low as possible for as long as possible. The BOC has our backs.

Bank of Canada Governor Stephen Poloz said he’s not worried about inflation temporarily rising above the 2 percent target this year, and the acceleration by itself isn’t sufficient to warrant an interest rate increase.

Speaking Saturday to reporters in Washington, Poloz said a tolerance for temporary movements is exactly why the central bank uses a 1 percent to 3 percent range for inflation and doesn’t mechanically raise interest rates when price growth surpasses the 2 percent point.

“What I don’t want is for people to be spending this entire year asking me what I’m up to because inflation is above target,” Poloz said. “You need once in a while to remind people that there’s a range and that’s okay, the policy allows for this. We’re not violating our target in some way.”

Poloz said he even sees some incidental benefits from the brief acceleration. Since inflation has under-performed in recent years, a period above target could actually help reinforce expectations for inflation at 2 percent, he said.

“In that abstract way, it’s actually a positive thing because we’ve had an extensive period where it’s been below, so that period of slightly above is going to help reinforce that 2 percent average which we haven’t quite made in the last few years,” Poloz said. “There is no intention there. I’m just saying that’s a positive byproduct of that modest overshoot that’s happening.”

Not being able to afford a home in Vancouver, despite having an above avg salary, just because I wasn’t born in the boomer cohort, I could care less about those who have to give up their second property here because of taxes. Who will pour the coffee and wait the tables for those rich enough for having a second home in Vancouver when average wage earners realize it doesn’t make sense to live here?

I love you Garth and usually agree wholeheartedly with your assessments, but I fail to see what can propel the GTA real estate market in the near term. Cheap and easy credit got us to this point, but with stagnant wages and tougher lending standards, who will be rushing into this market? Are bland Markham mcmansions now a great deal in your opinion?

“More profoundly, the reputation of BC within the federation is starting to stink. The war with Alberta is incredible and bitter. The collapse of the Trans Mountain pipeline project has led to hostility in the oil patch, and even a threat that the cowboys will turn off the energy taps to the greenies”

The Harper-appointed shills at the NEB shouldn’t have approved that pipeline in the first place. Why are we taking on a massive risk to support an American company, one which emerged from the ashes of Enron, to send oil to China? No one, not even KM has published any projection of permanent jobs coming from this pipeline. It won’t move the needle. Notley, in her divisive and short sighted way is trying to be like Jason Kenny lite in order to win an election, trying to get the taxpayers to subsidize Kinder Morgan’s risk. Why don’t we refine our oil here?

The ouster of the Tories under Kim Campbell can be summed up in one name: Brian Mulroney. He managed what I had not thought possible; surpassing P.E.T as the most disliked/hated Canadian PM. While the ‘face’ ad probably didn’t help matters any the truth is the Tories were going down no matter what.

As for those who think the price of housing will crash by 50, 60 or even 75 percent – well, it is nice to dream but reality says won’t happen under the current circumstances. Maybe in a few years when desperate Boomers w/o pensions have to sell up en masse in order to have funds to live on housing prices will decline into ‘affordable’ territory but those self same Boomers have to live somewhere. More likely they will try to secure a reverse mortgage or a HELOC if they haven’t already sucked out all the home equity.

RE: Chrétien ‘face’ TV spot
The response was classic Chrétien: “It’s true, that I speak on one side of my mouth. I’m not a Tory, I don’t speak on both sides of my mouth.” which got him even more votes.

I have been to both BC and Venezuela. The people have very similar ideals. People of both areas have the supreme belief that governments have mystical qualities and always act in the best interest of their citizens especially when expropriating assets which are seen as public goods.
Governments which expropriate are seen as good governments. Give the people fish, do not teach them how to fish. Catching fish is cruel anyway.
God help this country.

“Meanwhile there’s an elephant in the room. Doug Ford, combative brother of the new-deceased rebel, crack-smoking mayor Rob, is leading in the provincial polls and might well be premier by the middle of June.”
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It will happen. Doug Ford : June 07, 2018

Not quite sure what to make of your forecast for the BC Lower Mainland, but IMO, real estate is going down hard and it will stay that way for a long time after that.

Once the current correction become more widespread public knowledge, the fear factor will kick in, there will be a major rush to the exits and many will be slaughtered; especially the Mom and Pop types who HELOCED their homes to buy “investment condos” either for themselves or for their kids.

Its becoming comical how many stupid little examples of there being foreign buyers EVERYWHERE.

Ive been in Mexico since Nov of last year. I can work remotely so I threw everything into a storage unit and left winter (specifically Edmonton) behind for 5 months.

Just got back into E-town and today I drove around and looked at the new rental buildings in SE of the city. Im trying to find a place with a master that fits a king bed and atleast one night stand, and something I can rent for 6 months before I scram again next winter.

One cool looking place caught my eye, it had a HUGE banner, like its an 8 story building and the banner was basically from the top of the building;
“Just completed, upscale rentals, move in tomorrow!”

Sounds promising, I go into the rental office.

Two asian ladies, Id guess in their 50’s, could not understand the sales lady explaining that these were not for sale, they were rentals only.

Elderly lady 1 – pointing at unit 802 on the wall, “how much”

Salesgirl – “$2800 a month”

Elderly lady 1 – “Two-hundred-eighty thousand?”

Salesgirl (clearly annoyed) – “these are NOT FOR SALE”

Elderly lady 2 – Shrugs, has no idea whats going on. They both leave.

Im not trying to stir the pot here and rile up the comment section, just reporting on the first real estate interaction Ive had in months.

Got the relatives coming out west for a couple of weeks. Maybe I should hide their car with their Alberta plates. As Canadians we should not be infighting. The old Vets never fought overseas for this. They fought for us all. Together.

I turned into my usual nocturnal self when I’m not forced to follow a strict schedule. I slept in until noon, hung out with friends, and usually watched a movie or read a book at night before surfing the web and falling asleep late.

We need one more sharp swoosh down to even consider a long term purchase
Factoring in higher rates and sharply rising property taxes and utilities and high risk of job loss means buying today in the gta is a near certain financial death sentence
Many lives will be ruined
All because people are under the illusion they “own” their house when they’re merely paying inflated rent to the banks and government to have a chance to make a tax free capital gain
What a farce

I was reminded of the Chretien ad the other night when, for the first time, I viewed an NDP ad on the television. The ad features a greying early middle-age guy staring into the camera. He complains about a 6-month wait for his ill mother to be seen by a specialist and then immediately segues into a complaint about high monthly hydro bills.

I don’t quarrel with his complaints. Everyone has something they don’t like. What bothers me so much about the ad is the tone of voice, the look in his eye and expression on his face, the feeling I got that he’s about to “go postal”.

If that is intentional then the NDP powers that be ought to know now that I don’t like it. If ever I were to consider voting for that party in June that ad would give me pause. I don’t like feeling threatened.

“These other Canadians are not hurting BC, but rather helping support it.”

This is absolute nonsense. Houses are for people and not for the BC government or for the BC economy.
Who gives a crap about whether BC economy is hurting or not when people who live in BC cannot afford to buy houses because (among other things) people from Ontario or Quebec buy them and do not actually live in them most of the time?
Houses are for people to live in them, not invest in them!
Live in Ontario and want to “support BC”? But a house in Prince George or some other remote corner of the province where they have lots of land available.

Cheap rates will continue, or go even cheaper. Money laundering will continue. Massive immigration into Vancouver and the GTA will continue. Etc. So, massive upward pressure on housing prices will continue. In 10 years time, all Vancouver and GTA housing will cost much more than today. Might as well buy that SFD now if they have actually corrected 30% (but not so sure about that).

#16 Dave on 04.23.18 at 6:58 pm
“More profoundly, the reputation of BC within the federation is starting to stink. The war with Alberta is incredible and bitter. The collapse of the Trans Mountain pipeline project has led to hostility in the oil patch, and even a threat that the cowboys will turn off the energy taps to the greenies”

The Harper-appointed shills at the NEB shouldn’t have approved that pipeline in the first place. Why are we taking on a massive risk to support an American company, one which emerged from the ashes of Enron, to send oil to China? No one, not even KM has published any projection of permanent jobs coming from this pipeline. It won’t move the needle. Notley, in her divisive and short sighted way is trying to be like Jason Kenny lite in order to win an election, trying to get the taxpayers to subsidize Kinder Morgan’s risk. Why don’t we refine our oil here?

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The company went through every possible regulatory hoop. There is no “massive” risk. That’s all in your imagination. Victoria dumping raw sewage into the ocean every day like a third world dump is far more environmentally damaging.

Alberta just opened a new refinery. You have a few billion for them to build more?

Bottom line this is federal jurisdiction and BC is breaking the law by obstructing. Jason Kenney is waiting in the wings. Go ahead and make his day.

#17 Linda on 04.23.18 at 7:00 pm
The ouster of the Tories under Kim Campbell can be summed up in one name: Brian Mulroney. He managed what I had not thought possible; surpassing P.E.T as the most disliked/hated Canadian PM. While the ‘face’ ad probably didn’t help matters any the truth is the Tories were going down no matter what.

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Not true. The Campbell Tories were leading in the polls during the summer prior to the 1993 election. It really was a case of the PC campaign blowing up in its face. Plus, the Liberal-friendly media was incredibly patronizing and misogynistic towards her.

“It’s hard to predict sentiment, but a year from now lots of people may regret not having tried a good vultch in April. Remember, a 30% decline in prices wipes out a 50% gain.”
Garth, are you advocating buying real estate now? I thought we were pooched, hi prices, hi rates, too much debt, B20. How can prices still rise?

Around my neighbourhood speculators have bought houses with the cheap interest rates and renting to the youth for astronomical rent, upstairs/downstairs and now allowed a carriage house.

This is so anti-productive; in that, firstly we have water restrictions, secondly the youth/families move away and thirdly how is the community suppose to survive like schools, fourth no neighbours (remember fences had gates in backyard fences) and high fences, fifth pets/animals get left behind when renters have to move. And many more reasons to have in place.

Like another blogger mentioned the speculator tax and any other BC tax should be throughout the province.

Got the relatives coming out west for a couple of weeks. Maybe I should hide their car with their Alberta plates. As Canadians we should not be infighting. The old Vets never fought overseas for this. They fought for us all. Together.

——————–

Many of the young men fought because of the fear of being shaming if they didn’t participate. Yes, men are weak minded and easily influenced by shame. Ask any woman.

It’s been explained 1000 times. The Chinese don’t want to buy refined products from Canada. They want their own refineries so they can source the crude from wherever and do the value added refining themselves at a much lower cost than it could be done in Canada.

Selling refined products abroad can be done but it is more complicated than selling crude. Crude can be thought of as everything from gasoline to asphalt in the same tank. Once you refine it you need a different boat for every product. Only a pipeline can transport various refined products without without mixing them so you have to re-refine them anyway.

Refined products are generally only put to sea over short distances or when one area (US say) has a surplus of a product (diesel in this case) and another area (Europe) has a shortfall.

It doesn’t matter that Kinder-Morgan was tainted a bit by the Enron scandal. The pipelines and refineries that Enron controlled still exist after the fall of Enron and someone has to operate them. Think for example what happens when someone gets foreclosed on their house. Does the bank tear it down? The assets had to end up somewhere and Kinder Morgan was not involved in the Enron fraud.

Yes there will be new full time jobs as a result of the pipeline. People will be employed in Alberta keeping the pipe full of oil, even though they may be working for Shell or Suncor and not directly for Kinder Morgan. Kinder Morgan will have to hire people to maintain and operate the pipeline. Every lift station along the route will have mechanics and operators keeping it running. At the end of the line people will be employed to load the oil onto the boats and run the tugs that move them in and out of port. Plus every base economy job like this usually creates several knock on jobs as the people directly employed go and spend their money at Starbucks, Sportcheck, and on a new house. Plus all those employees will pay income taxes, and Kinder Morgan will pay taxes too. Lots of taxes.

Haven’t we learned anything over the last 200 years? Economic activity is always good so long as the environment is protected to the extent possible. Repressing economic activity means we all have less. Repress it enough and we’ll all be Venezuela.

Most of the full time jobs created by the pipeline will be in BC, either operating and maintaining the pipeline or at the loading facilities.

The idiots at the Turdeau headquarters in Moronville have been speaking to the press this week saying utterly stupid things like if Kinder Morgan cancels the project, someone else will take it over. Who? Enbridge? TCPL? They both lost a billion dollars on projects the government basically cancelled after approval. Do you think there is anyone else idiotic enough to try and negotiate with the BC government or the Turdeau Sesame Street show?

So why Kinder Morgan instead of some holier company without the scourge of the devil Enron in their past? Well, they own the right of way. Pretty unlikely they are going to let a Turdeau sponsored social justice inspired government funded startup put a pipe in their right of way that the government wouldn’t let them build. It’ll be the same pipe doing the same thing either way.

Here’s what you have to do folks. Take an IQ test. If you score less than 100 or you cheat, refrain from having opinions on complex issues. That’s 50% of the population. Chances are you got your opinion from somebody else who was manipulating you.

Pedestrians and bicyclist get hit, killed or disabled on an almost daily basis in Toronto. I’m more afraid of distracted drivers, careless drivers, and too old to drive drivers than I am of any terrorist. So get a grip. To prove my point:

Since GTA is on sale, it is time to go house shopping. I like nice diverse hoods like Markham, Richmond Hill and Brampton. And don’t forget, the more you buy the more you save. If you buy 3 Markham specials for $4 million you save yourself $1 cool million. Plus you get to live close to Pacific Mall where you can buy all the brand name merchandise on the cheap. It just doesn’t get better than this folks!

I was worked in the same election for the Reform party, and Preston Manning. Preston is the only politician I can honestly say I liked. Reform could have run a cat in most western ridings and won. We even took NDP ridings. Sorry Garth, the seeds of the PC demise were in play long before that stupid ad.

“If Ford is elected, locals might even expect a mini-Trump effect, with renewed buyer confidence and another headlong plunge into the debt pool. It’s hard to predict sentiment, but a year from now lots of people may regret not having tried a good vultch in April. Remember, a 30% decline in prices wipes out a 50% gain.” – Garth.

I fail to see where the buyers are going to find the money to vultch. B20 will remain, interest rates will keep rising.

The City of Vancouver’s new empty homes tax is expected to bring in $30 million in revenue in its first year.

Vancouver Mayor Gregor Robertson says $17 million has already been collected from owners of almost 8,500 properties that were determined to be vacant or under utilized for at least six months of the year.

The tax is the first of its kind in Canada, requiring homeowners who do not live in or rent out their properties to pay a one per cent levy based on the assessed value of the home.

Robertson says the tax was intended to address the city’s near-zero vacancy rate.

The mayor says it’s unclear yet if the tax has increased rental accommodation, and better data collection methods are being developed for the city to monitor the impact of initiates like the tax more closely.

The median tax due is just under $10,000 and Robertson says anyone who doesn’t pay up will face fines and have the bill added to their property taxes next year.

Surrey appears to be the last holdout for cheaper gas, with prices averaging 154.9 cents, according to gasbuddy.com.

Prices in Vancouver, Burnaby, Richmond, Coquitlam and New Westminster were all at 157.9, although there were a few holdout stations several cents lower.

The price of fuel spiked last month to 156.9 cents a litre, as refineries in B.C. and Washington state were closed for repairs. Alberta’s threat to reduce oil shipments to B.C. is also fanning fears of outrageous gas prices this summer.

The other cool areas I like are Scarborough, Mississauga and Pickering. They are on sale but not as much as the northern burbs. You can still save a lot of money if you act now. Once those sophisticated foreign investors smell the blood, there will be no more deals to be had. Hurry up as the prices may be much higher this time next year. You heard it here first, folks!

Anyone who thinks these price drops will double over time – that houses in 2020 will command half what they did in 2017 – is being unrealistic. It’s not happening in the GTA.

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There are a lot of speculators in the GTA market who didn’t need that second or third empty detached home, condo or vacant piece of land, give money to subprime lenders, can’t refinance under B20 or whose short-term loan to bridge the 2 homes they own is running out.

The Dereks, Mattamy homebuyers, and woman in Ajax with the 0 down payment $6000 mortgage are not one-off cases. The more interest rates increase and people renew their mortgages, the more foreign investors will realize Ontario still has ways to go before it hits rock bottom.

Even with the 15% tax gone, they will be too scared when they see what happens next in the syndicated mortgage industry and condo market to come back.

The city of Vancouver may be safe from 50+% price drops, but condos in the Lower Mainland will be toast, especially in Maple Ridge and Mission. In some neighbourhoods, barely $100k separates 2000sqft detached from new “luxury” townhomes. As detached prices melts, townhomes and condos will go down hard, as demand dries up, and sellers flock to SFD’s they now qualify for.

Poloz is quickly becoming irrelevant, as the rising bond market brings mortgage rates with it, regardless of what the BOC does. Poloz has two choices: 1) do nothing, and mortgage rates rise only slightly slower than if he raised rates, and watch a declining loonie drag Canada into a recession, or 2) raise rates to tame inflation and avoid a recession, and watch as many Canadians are “priced out” of the mortgage market, and thousands more can’t service their bloated monthly debt…

Canada is the second largest country in the world. Move somewhere else.

Envy?//////////////

Yes canada is a geographically large country. Very astute observation of you. However the land mass of Canada has nothing to do with its macroeconomics or cost of housing.

>Size matters. Move someplace else.

Go ahead. Make a rebuttal.////////

There is nothing to rebut, if you read your comment you did not make any arguments.

>I didn’t have to. I looked at your post for your “argument” and noticed that your “argument” started with a false premise: that there is a housing crisis in BC. There isn’t a housing crisis in B.C., there is a lack of affordability. Some people can’t afford to live here. So move. There are lots of places in the second largest country in the world.

When your “argument” starts with a false premise then the remainder of your “argument” will not be valid (true) so I didn’t have to waste words on you.

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#192 Newcomer on 04.23.18 at 1:14 pm

I don’t see a version where the economy does not go through a reversion to the mean. The only question is timing. I also don’t have plans to buy in Vancouver. I also don’t see a scenario where buying will beat renting in the next five years and I will be changing to part time residency before then. I no longer have a dog in this fight.

>My concern is that a fast crash will get lots of people in big trouble at the same time. Mass slaughter. A slow decline caused by the market self-regulating would have given people more time to adjust. Sorry to have offended you.

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If you socialists want something to worry about, you should be worried about continuing low interest rates wiping out your pensions.

The second report in a two-part Angus Reid Institute study of the TransMountain conflict finds Canadians are three times more likely to say the protesters do not represent the mainstream view of their compatriots.

Protests against Kinder Morgan’s TransMountain Pipeline followed Prime Minister Justin Trudeau all the way to London, England. Where protestors from the United Kingdom’s branch of Greenpeace demonstrated.

But the Angus Reid report indicates the broader Canadian public is less enthusiastic about resistance to this project.

Six-in-ten Canadians, 59 per cent say the pipeline expansion would help the Canadian economy overall, while one-in-five, 17 per cent say it would have negative consequences.

More Key Findings:

60 per cent say they view the protests against TransMountain as not representative of the mainstream view, but fewer, 46 per cent say they would like to see B.C. Premier John Horgan should condemn them
By a ratio of three-to-one, Canadians say Kinder Morgan could have done a better job of earning public support and brought much of this conflict upon itself. This opinion is held by supporters and opponents alike
Regardless of which side of the debate they are on, more than half of Canadians say they’re paying close attention to this issue – including majorities in every region other than Quebec

Should just tax unlawful mainland chinese for playing with our canadian market regardless of their residency status, instead of punishing other Canadians from other provinces. Disclaimer: I am born as mainland chinese without consent of myself. Love true north and stand to fight these greedy bastards.

Your right garth, money’s heading east…Ontario couldn’t function without bc’s tax dollars it’s a complete joke what bc donates to Ontario. As for real estate Vancouver is on the decline… world class city not like Toronto! Prices will go back up higher in time. Most towns in BC real estate is going good and prices are still reasonable.
BC guy

JUST WHEN YOU THOUGHT!
Just when you thought that the Bankers, and Credit Unions, could not, would not, gravitate to a lower level. You would be proven wrong. Chew on this tad bit. You apply for a $400,000.00 mortgage, the lenders register $500,000.00 on the property. Even though you are making payments on the original mortgage amount of $400,000.00. The property for all intense and purposes has a lien of $500,000.00 registered against it. How can this be, you may ask ? The lenders, as always, being helpful, and looking out for your best interest , explain in comforting, soothing words, should you (God forbid) ever want to return for a HELOC, etc. this little upside( registered debt), will save you the aggravation, (indignity), if you may, of having to go through the same loan process all over again. In the highly unlikely scenario, where you need extra coin, no problem, as you have been approved and reassuringly encumbered for the extra $100,000.00. if you ever need it. On the surface, all is well in Banker Ville. The problem being, what happens if you get sick, lose a job, etc. and you really, really need the extra coin. Are you going to call Saul when you no longer qualify. Remember, you’re on the hook for $500.000.00, Sorry, my indebted friend, you are not going anywhere. You are encumbered for an extra $100,000.00, and the lender has got you by the short hairs . You can trust me in the land of gypsies, tramps and thieves,

When I moved back to Canada from Seattle to live in Victoria, I had a pickup with Washington plates for the first few months. One day driving to Ladysmith I noticed a frantic logging truck driver yelling at me to go home. That was when the lumber dumping disputed was on.

At that moment I realized the monumental mistake I had made. I traded a civilized society for a snake pit filled with inbread hillbillies.

Since that day I have developed vial hatred and utter contempt for Canadians and especially BC’er’s

Sitting here now at a pub and nobody cares about the tragedy in Toronto.

The trend is down, psychology with house prices going down in the GTA, higher interest rates, and new bank stress tests hardly will reverse the downward momentum in housing.

I have no clue why Garth has suddenly reversed everything that he has said over the last 10 years, all because house prices have slightly corrected??? Someone or something obviously has his ear!

Prices rose in the GTA and towns surrounding 30-50%
in one year, yet because they’ve now finally started to go down, it is time to buy??

Hardly!

Housing is slowing, hence many construction jobs will be lost, essentially creating a recession. Nobody will be buying houses when the recession hits in a year or so and people will be forced to sell their homes, putting a further downward spiral on house prices.

” On the surface, all is well in Banker Ville. The problem being, what happens if you get sick, lose a job, etc. and you really, really need the extra coin. Are you going to call Saul when you no longer qualify. Remember, you’re on the hook for $500.000.00″

That’s simply a load of BS. A mortgage charge may be for a specific dollar amount, but the bank/lender only has legal claim to the amount of indebtedness that remains. Registering a higher-than-the-loan lien allows the lender to extend additional credit secured by a first mortgage, and potentially wards off other potential lenders who may wish to take a junior position. But it does not, in the case of a default, increase the indebtedness of the borrower over and above the amount of credit extended by the lender.

So no, you’re not “on the hook for $500,000” unless you subsequently negotiated with the bank to advance additional funds. Complete misinformation, “fake news”.

The GTA is not “on sale”. Despite no increases on individual identical houses since the 2013 apex, prices are still sky high, relative to other asset classes.

Toronto RE will be “on sale” when rentals can be bought for 100-120X rent, and you can make a case for the P/E ratio, net of taxes, depreciation, and other expenses, being in the neighbourhood of 10-15X. Which implies a dramatic discount from current prices, if not in nominal terms, then at least in real terms. Although I doubt there will be much of any inflation with Canadians/Torontoians so pickled with debt. And merely “lowering interest rates” won’t be an option this time around when the crisis arrives at the Bank of Canada’s doorstep.

Christian says: “Who gives a crap about whether BC economy is hurting or not when people who live in BC cannot afford to buy houses”

Uhhh people in BC do buy homes, in fact the overwhelming majority of BC homes are owned by BC residents. Why don’t you just come out and say you deserve a house in Kits, cause that is your real beef. You can’t afford to live in the best markets so you want to see it burn….not realizing that said fire will take out the bottom feeders like you first.

You remind me of the guys here that complain about over priced homes in Kelowna. Homes were flat and affordable forever here. Guys sat on the sidelines waiting for a crash that never came, homes take off 2 years ago and these guys want chaos so they can finally buy in at prices they passed on 4 years ago with money that costs twice as much to borrow.

Garth is right, you guys have no idea what you are cheering for. When have market crashes and stale economies ever benefited the folks at the bottom? Never, and if this market tanks homes will be scooped up by locals that have big RE holdings and cash, and you will still be a renter. Just pray you still have the job at the mall.

If I remember rightly Garth has said, condos are not immune to the downturn. Ross Kay said condos may increase for a bit longer and to wait till next yr to buy. It sounds like they are both on the same page. Condo prices will start to decrease shortly, so wait a bit longer to buy.

For those that say that it will not benefit “CANADA”, I just shake my head, get educated, stop listening to the hypocrites that fly in or drive in to protest and do some research.

The oil industry through various ways, through employment, lease agreements, dollar per barrel, tax’s, contribute billions to our social programs. Wow, just wow, so much ignorance towards this industry; if the oil sands were in Ontario or Quebec it would be the greatest thing since sliced bread. By the way, we do have refineries in Alberta. Care to invest your dollars to build another one???

#64 Bob Dog
When I moved back to Canada from Seattle to live in Victoria, I had a pickup with Washington plates for the first few months. One day driving to Ladysmith I noticed a frantic logging truck driver yelling at me to go home. That was when the lumber dumping disputed was on.

At that moment I realized the monumental mistake I had made. I traded a civilized society for a snake pit filled with inbread hillbillies.
****************************
So one guy yelling at you is enough to turn you off Canada? What a sensitive soul you are!

For the most part, we express our differences in a fashion that doesn’t involve automatic weapons fired by “responsible gun owners”. Welcome back to God’s Country.

@#51 No thumb Watson
“Vancouver Mayor Gregor Robertson……”
+++++
Ahh yes.
Gregor The Dim.
Not running in the election this Fall.
Also promised to spend the money clawed in from the “Non resident tax” to build housing for the homeless( gee, wasnt that why he was elected AND promised? To END homelessness?)
Anywho.
Gregor the Dim then went on to apologize to the Asian immigrants from the 1920’s, 30’s, 40’s. 50’s, etc etc etc
for the “discriminory” ( I’m not kidding….) practices of previous racist govts…..( apparently irony escapes him and one wonders when he eventually becomes Premier if the lawyers from Asia will sue his govt for Billions…..)

Gregor the Dim…..looks good….sounds dumber than a bar of inbred drunks in Alabama on a saddiday nite.

I also have just activated citizenship in Ireland (that means all of the EU) that I am entitled to.

The family and I are assessing our options while we expand our business. internationally.

If housing remains out of touch in a couple of years we are all out of here. All 9 of us!

We are fed up and will not wait forever.

I was living in Hong Kong when I was single and decided to come back to Canada in 1986 to start a family. I could have gone anywhere in the world and I decided to come to Vancouver because I thought I could keep the family together here because it was one of the best places in the world to live.

I do not have that perspective any longer.

I now feel this is an impoverished place of fraud and deception that has bilked young people out of their futures.

Our family alone leaving will not bankrupt BC but we and others that think like us will have an impact.

Thanks for the tip! Listed at 23% below assessed – we’ll see what it sells for. This might be the start of a whole new leg down for detached home prices on Vancouver’s west side!

Though it may also be under-priced on purpose, to try and spark a bidding war.

That’s so 2015.

Sorry for not responding earlier, the family and I are on a last-minute vacation to the Vancouver colony of Maui. Cost about the equivalent of a Vancouver mortgage payment, but of course, we rent for much, much less.

Interesting observation, by the way: met a few other families from the lower mainland while our kids played together in the pool. Most seem flabbergasted that we’re NOT here at the invitation (and the expense) of our parents.

I realize it would be political suicide, but I was thinking recently that the Feds could do a better job explaining CPP and OAS to people. Maybe if more people knew they would barely get by on these programs they would realize they need to save more. Drill it into people they can’t devote all their money to housing, clothing and Netflix.

“Here’s what you have to do folks. Take an IQ test. If you score less than 100 or you cheat, refrain from having opinions on complex issues. That’s 50% of the population. Chances are you got your opinion from somebody else who was manipulating you.”

Have you taken the test?

The cost benefit analysis on this pipeline was done when oil was over $90/ barrel.

“e LOOP, the Louisiana Offshore Oil Port, where a 29-kilometre pipeline is already built from the Gulf of Mexico to the Mississippi Delta. It can load and unload oil from Very Large Crude Carriers at the rate of 100,000 barrels per hour. And while it was built to import crude, it is now adding export capacity.

McKay says the LOOP will be “fatal to Alberta’s plans.”

“Potential foreign refiners and customers will demand that future oil price, quality, shipping costs, and delivery speeds match those that LOOP can offer.”

“According to a study by the Corporate Mapping Project, the combined lobbying of politicians in British Columbia and Ottawa resulted in a total 826 contacts with government officials between 2011 and 2016: “This amounts to about one contact every two business days during that period.” That’s more contact than the average Canadian will ever have with their governments.” Tyee

“By 2014 Kinder Morgan confirmed that it had collected $132 million in fees. Economist Allan has described the approval of Kinder Morgan’s firm service fee by the board as unprecedented. “The NEB effectively granted Kinder Morgan a right to guaranteed shipper surcharges in order to build a regulatory approval process ‘war chest’ available to the pipeline company to draw on, when and as needed, to fund capacity expansion applications for its Trans Mountain pipeline system.”

“Kinder Morgan has a long and detailed record of violating both environmental and financial laws resulting in penalties of $162 million since 2000 in the United States. Key offences include environmental violations ($119 million) such as pipeline spills and explosions, energy market manipulation ($20 million fine), pipeline safety violations and repeated labour violations. In 2011 the U.S. Department of Labor sued Kinder Morgan for underpaying nearly 4,600 workers for overtime for at least two years. The company resolved the lawsuit by paying out $830,000 in back wages.

The company has also violated the Foreign Corrupt Practices Act. In 2007 the El Paso Corporation, a subsidiary of Kinder Morgan, agreed to pay $7.7 million “to settle allegations that it indirectly paid nearly $5.5 million in illegal surcharges to Iraq in connection with its purchases of crude oil from third parties under the United Nations Oil for Food Program.” El Paso never admitted nor denied the allegations.”

No one is really listening, no one seems to be reporting all the different perspectives and facts. An oil company is being allowed to stick a wedge in our confederation.

Are there economic benefits – yes.
Have their been big horrific oil spills – yes.

BC has large economic benefits from a healthy vibrant ocean.

Who exactly in Asia is Kinder Morgan selling too?

Russia is soon to complete a pipeline to China.
Australia is knee deep in LNG.
Bahrain just discovered a large field.
The East side of the US is now exporting oil and LNG through the infrastructure once used to import.
Iran is selling more to China?

Why did Kinder Morgan decide to pay down debt rather than cough up money for the pipeline.

Once again – good economic (short term benefits). Not sure where all the permanent jobs would be for BC. Oil sands investment already down, HSBC is reducing their investment. Alberta has sun and wind that could supplement oil demand. What about geothermal. I am not saying get rid of oil.

If Canada buys the pipeline…I wanna see a business plan. Just like the bank expects one from me.

I also invite every Albertan out to BC to visit our calm waters in the middle of the summer. Always keep your eye on the ocean, it can turn in a moment.

All BC wants is proper assurance that if a spill occurs it will be cleaned up prior to sinking (choppy waters). Kinder Morgan’s is only responsible for pipeline, not the tanker spills. Environmental regulations are the jurisdiction of the fed, prov,local.

If it benefits Canada I am all for it. But if you put a oil pipe across my back yard – I’d expect ‘as a good neighbor’ you would be prepared to clean up any spills.

And the elephant in the room is the First Nations court challenge…not the BC government (they just happen to be in agreement).

Kinder Morgan pitted brother against brother aided by journalists who missed the class on ethics and purposely omit some of the more relevant facts. Kinder Morgan gave a deadline of May 31 – but has failed to submit all the permits they need. Why the hold up…oh yah court case nobody wants to talk about…long way since Oka.

Once again….pipeline good economics benefits…if customers and no first nation court challenge, what happened to the Enbridge Pipeline. Less we forget.

Many of our friends are deep in debt and living paycheck to paycheck.
Interest rates are rising in US and Canada will follow. US 10Y almost hit 3% today.
With the above factors, going out and buying 1M+ townhouse in the burbs hoping to save is not smart move.
Folks, take a look at available houses for sale – bunch of speculators desperately trying to unload illiquid asset.
Good luck!

P.S. Just like Garth was wrong on RE for 10 years, I would bet it take at least 5 to see the bottom (in real terms, not nominal)

#32 Howard: Polls can be notoriously misleading. Kim Campbell could have walked on water & still would have lost. People were extremely angry at the Tories & Mulroney in particular. To this day there are folks who shriek in rage at the sound of his voice saying ‘I have the mandate of the people’. Purely Pavlovian response, cue flashback. And whose dulcet tones were heard far too often during the re-election campaign, endorsing Kim? Kiss of death, polls notwithstanding.

Have to address Mark #70.
Bought my current house April 2013. In 2017 peak could have sold for double – admittedly I did the basement and other improvements. Later in the year got assessed by the bank for 85% over what I bought. So still close to double.
Same observation for all houses in my subdivision which have similar designs. Neighbour got 50% over 2014-2016.
So what is this 2013 apex for identical houses? And why keep mentioning since it doesn’t make sense at least for mainstream dwellings in the two big markets in Canada YYZ and YVR.
I think this was put out by Ross Kay but without any actual explanation.

If I recall the 1993 election correctly, there were really two big issues. The much hated GST and the cancellation of the Sea King replacement.
Chretien said he was going to kill the GST, ax da tax was his clarion call, playing on the hatred of the tax. After being elected he said no he didn’t say that and became the GST’s biggest fan. Ironically Sheila Copps had to face re-election over the issue.
The Sea King is still flying 25 years later after this procurement fiasco.
I’m always amazed people continue to vote for these idiots.

So despite years of outlining the headwinds against RE, and highlighting a never ending list of measures that will prick the market – like B20 – its now game on for RE in TO?

So all those smart, prudent, ‘financially responsible’ renters on the sidelines that saw prices jump massively in the last decade, but who waited patiently for a correction, are now told to essentially jump in before Ford removes the foreign buyers tax?

If foreign buyers are not an issue, then what does it matter if the tax is repealed? Sure, you could say the belief in the foreign buyers stimulates local buying – but that is moot since are the financial variables are against local buyers.

If Canadians are the buyers driving up prices, and they are pickled in debt, face ever rising interest rates, and more stringent lending requirements, how are they exactly going to reinflate the market?

Regardless, it seems that all those uneducated realtors and RE pumpers were right for years if a tiny little correction is all that takes place onto every higher prices.

Despite a decline of 30-40% in sales of Vancouver and Victoria, the communities outside of Victoria still have anything of quality sell in days and over asking.

I live North of Victoria and since last July sales became stagnant and houses had price reductions before selling. The first few weeks after the full implementation of B20 and houses are selling in a day or 6 at the most with prices over asking.

And no, this is not some realtor BS as I have access to the listings and sales data (closing date and price). This is a ticked off renter who was looking forward to the prick that B20 was supposed to be.

Two explanations – either B20 is a complete bust as all these quick/over ask sales are post B20; or capital is driving north because there is no foreign buyers tax and spec tax. Either way, the long awaited spring market is finally here to my chagrin.

If things do not cool down soon, I am buying because it seems that B20, rising interest rates, more stringent lending are doing little to curb the market. And if all anyone can hope for is a little 30% TO style correction before prices rise again, then it looks like I missed the boat on the river to ever rising prices.

@#84 Capt are you Serious?
“I was thinking recently that the Feds could do a better job explaining CPP and OAS to people. Maybe if more people knew they would barely get by on these programs they would realize they need to save more….”
++++++

Ummmm.

Have you been watching the Sh!t hitting the fan in Nicaragua yesterday?
Lowered pensions and rising taxes…….
Coming to a Walmart barrista near you……..

It seems Canadians are happy to commute 90 minutes a day ,pay a big mortgage,live hand to mouth,pay taxes through the nose then die a few years after retirement.I guess thats the Canadian dream.Sorry but I prefer to work 6 or 7 months a year then live in Mexico for cheap and laugh at all the debt and tax slaves living in a cold Siberian climate.Life is very short to work to pay for welfare and a war state.I guess someone has to.

In your original post reporting on the SFH ~30% price drop in certain areas of GTA you suggested that someone that really wants and can buy a SFH could take advantage of the market condition to get a better deal. What was not clear to me in the post is the criteria that one would need to meet to be in the condition that he/she can buy a 1M$ house. Could you please clarify? What are the criteria (eg: total net worth > 1M$ or 3xgross family income > 1M$ )

#4 2 and Too on 04.23.18 at 6:42 pm
We sold our home in North Vancouver just under 2 years ago for $2M. It went back on the market shortly afterwards and only just sold for $1.8M. ,,,
_ _ _
A more interesting question would be who can afford to buy a $1.8 million home in North Van?

#81 NEVER GIVE UP on 04.23.18 at 10:49 pm
Just received my E1 Visa for the USA.

I also have just activated citizenship in Ireland (that means all of the EU) that I am entitled to.

The family and I are assessing our options while we expand our business. internationally.

If housing remains out of touch in a couple of years we are all out of here. All 9 of us!

We are fed up and will not wait forever.

I was living in Hong Kong when I was single and decided to come back to Canada in 1986 to start a family. I could have gone anywhere in the world and I decided to come to Vancouver because I thought I could keep the family together here because it was one of the best places in the world to live.

I do not have that perspective any longer.

I now feel this is an impoverished place of fraud and deception that has bilked young people out of their futures.

Our family alone leaving will not bankrupt BC but we and others that think like us will have an impact.

I hope we do not have to pull that trigger and leave.

================================

If you have other options (many Canadians don’t), you are wasting your time and that of your family here.

Look around and ask yourself where would you like to see you and your family 10 years from now, both professionally and personally and I guarantee you that you won’t be achieving it in Canada.

You have to see it for what it is – a resource colony, based on cheap labour, run for the benefits of the few ultra rich with provincial mentality, so if you look for visionaries and modern life you are in the wrong place.

I am amazed by the statements that GTA will not experience catastrophic real estate correction. Of course it will and John Torry, soon even God, Allah, Buda will not be able to do anything about it.

There is no economy, or real income to justify such prices. period.

Current valuations are driven by extensive debt and not sustainable in long run unless we believe that low rates and roaring inflation are not just possible but 100 % certainty in the next decade or two in which case you won’t have the means to live, god forbid retire and GTA could be a Detroit style run down, specially the suburbs.

Having ever increasing debt is also a must, of course we will lie about government debt stating that it is 35 % of GDP while it is 90 % (federal, provincial, crown corporations) and keeps increasing, private debt is 267 % of GDP and keeps increasing

we manufacture nothing and import everything (the country with the worse account balance per capita in the world).

We were able to continue to lie successfully to the naive gullible sheeple (which would not have been possible if it was not that stupid) and I think at some point even the lairs started to believe in their own fairy tales which is of course tragedy that the next generations will pay for.

B.C.ers could care less if their reputation is suffering back east. As if B.C. ever mattered to the ROC except as a treasure house to be raped & plundered.
B.C. is the leading province of “lil potatoes” post modern state. Take heed ROC, ours is a blueprint for the rest of Canada. Learn from us & get ahead of the curve, denigrate us & find yourself suckin the hind tit.
We have no common identity out here. We are solidifying tribal identities.Individuals gravitating towards economic tribalism within an economic globalist oriented far away government.
Caucasians in the lower mainland are now a majority minority. The top 4 immigrant classes into Canada 2011 to 2016 are #1Philipines #2India #3China #4Iran. 2017 Parliament Report on immigration was 296k permanent residents, 286k TFW’s, 266k International students & then there is over a million 10 year visas issued in the last couple years.
B.C. is the bridgehead. B.C, is the petri dish. The numbers of people coming in is going to keep climbing. Legal or not.
Prepare yourself ROC for the overflow of people & money that can’t make it here & got to keep moving. There’s a $trillion of tax assessed equity sitting in Lower Mainland R/E. Its going to come your way all right. But you may not like where it settles.
Tell your deadbeat kids to look at the graduating class of the STEM programs at UBC & Simon Fraser to see what competition coming down the pike looks like. Get them into a trade,teach them your business, give them as much unfair advantage as possible. Train them to spend nothing on frivolities, save money, buy quality & hire the best lawyer you can afford. You got a little bit of a head start:maybe.

@ Dave on 04.23.18 at 6:58 pm
“More profoundly, the reputation of BC within the federation is starting to stink. The war with Alberta is incredible and bitter. The collapse of the Trans Mountain pipeline project has led to hostility in the oil patch, and even a threat that the cowboys will turn off the energy taps to the greenies”

Notley, in her divisive and short sighted way is trying to be like Jason Kenny lite in order to win an election, trying to get the taxpayers to subsidize Kinder Morgan’s risk. Why don’t we refine our oil here?

———————————————————————————————–

we do;however, we can’t refine enough to sate our appetite for the stuff.

Great post Garth!
May it help to inform the masses of voters who are (sadly) lacking in actual knowledge or experience but have a wealth of uninformed opinions. You all know what they say about opinions, right? ;)
Funny to me is that it has never been easier to be well-informed, all at the touch of a keyboard no less. We don’t even need to get off the couch for cryin out loud. This is, or should be, a voter’s social contract.

———————–

#39 Nonplused on 04.23.18 at 8:02 pm“Here’s what you have to do folks. Take an IQ test. If you score less than 100 or you cheat, refrain from having opinions on complex issues. That’s 50% of the population. Chances are you got your opinion from somebody else who was manipulating you.”
————-
Good outline, with which I agree. Particularly with this advice…can we add one to voting booths? Please!?

I’m glad you used the word federation to describe our country, because after the internal anti-free trade beer ruling, and the deep divisions of Kinder Morgan, we have officially become a joke. We have no nationalism other than trying to influence other countries to use the word peoplekind.

It’s disgusting that we have taken an English parliamentary system that has worked for centuries and thanks to the 1982 Charter by The Snowboarder’s father, we have an unelected, unaccountable, politically activist Supreme Court who now believes they are our politicians.

Anyway I digress. Sorry about that, I haven’t had my morning coffee yet.

Yes, Ford will win a massive majority, thus not completing the trifecta of brilliant campaigns run by Tory and Hudak, and will scratch the go-home tax.

But I’d be cautious about calling this bullish for housing. You have always noted that the foreign buyer effect in the GTA is at the margins, which it is. Anyone living here knows it wasn’t foreigners but the idiots who live here who drove up housing prices. Including Happy Housing’s favourite profession.

The bear factors of B-20 and the high % of mortgages renewing in 2018 will way outweigh the scrapping of the go-home tax.

I am sticking with my mathematical approach in saying GTA falls below its long term trendline and has a 54% price decline.

If people want a bullish factor, it’s that I think all signs point to the rate rises in Canada and the US being done. But as I said a week ago, it won’t matter much as there is still the stress test and so much housing inventory to wash through the system.

Well there can be a “we” in economics. Socialism and communism are all about “we”.

Our system based on at least some freedom and self reliance tends to work well for most people but there has to be safety nets and opportunity for the young or they will quite rightly rebel. If wealth gets too concentrated then wealth taxes become appropriate.

It is debatable if we have already reached that point.

In any case meanwhile most young people stil need to get on with it and seek opportunity as best they can even if they support more taxes on the old and wealthy.

#32 Howard: Polls can be notoriously misleading. Kim Campbell could have walked on water & still would have lost. People were extremely angry at the Tories & Mulroney in particular. To this day there are folks who shriek in rage at the sound of his voice saying ‘I have the mandate of the people’. Purely Pavlovian response, cue flashback. And whose dulcet tones were heard far too often during the re-election campaign, endorsing Kim? Kiss of death, polls notwithstanding.

————————————–

Mulroney made some very difficult decisions for the good of the country even when they were unpopular. And he DID have the mandate of the people – two majority governments – so what’s wrong with pointing it out?

Anyway, in comparison to the pea-brained twit currently in office, pretty well ALL of our previous PMs look good in comparison.

The purpose of the economy is to provide a good or optimum balance of maximizing the production of valued goods and services while achieving some level of fairness in the distribution of the goods and services or monetary claim on same.

A system that has too much wealth disparity (how much disparity is too much is subject to great debate) would need to be modified through taxes and redistribution.

The company went through every possible regulatory hoop. There is no “massive” risk. That’s all in your imagination. Victoria dumping raw sewage into the ocean every day like a third world dump is far more environmentally damaging.

=====

Finally someone said what I have been meaning to say on here, but just haven’t found the time. This is verbally the message I have been trying to convey out here and most people are equally dumbfounded and perplexed once they realize this.

Too bad all the big mouths protesting this deal didn’t have to publicly and honestly provide a rational answer to this statement

Amit Patel helped his parents buy into Cosmos. They wanted to be near the new TTC subway station. Although they had looked at other buildings in the area, the Cosmos prices were lower than another they had considered.

“If we’d known what was going to happen we would probably have taken the other one even though it was more expensive,” said Patel.

“I feel they do owe us something for keeping our money for two years. We could have used that money,” he said.

Patel was surprised to find that the refunded deposit did not include interest.

Although Ontario’s Condominium Act specifies interest be paid at 2 per cent below the Bank of Canada, that rate is so low, buyers are effectively refunded without interest, said a Tarion spokesperson. Neither Tarion nor the province could cite the last time buyers received interest with their refunds in instances such as the Cosmos cancellation.

B.C. will have their problems due to the NDP policies. How much RE prices correct will be proportional to the laws they leave in effect, modify or cancel. At some point, if severe enough, the foreign investors may sell.

The rest of Canada has just been spared by Poloz who kept rates low during the renewal of 47 % of Canadian mortgages outstanding (July 2017 to June 2018) which is coming to an end. Mission accomplished.

Housing has now become a rental program, just like cars. Money is rented from the banks to “acquire” an asset as costs of living preclude the ability for most Canadians to accumulate capital. This is a key policy of the enslavement process, which average Canadians have so willingly aided and abetted.

“Hope you are well. Why oh why would the gta bubble not blow like all previous asset bubbles? Why would it not follow a similar chart to the late eighties/early nineties? Is it different this time??”

Yes it is different this time. Since 2005 the GTA has had the world’s biggest greenbelt surrounding it (7500 sq km). Before the ink was dry on the legislative papers, Toronto became the condo capital of North America. Demand is still high with the constant stream of immigrants coming to the GTA plus locals who need a place to live. There are no empty subdivisions with unsold homes like there were in the US housing crash. Unless the government loosens the greenbelt, there will be no cratering of prices. GTA prices are still 12% higher than they were in 2016. Read this article by Benjamin Tal who says there will be no collapse.

If these anti foreigner taxes, empty house taxes, and flipper taxes and so on sufficiently spook flippers, speccers, and other “investors” enough to stop buying houses, that will lower the prices enough for people who actually want to LIVE in them to buy them.

Those cheap houses will then, as you say, likely not stay cheap for long, but we’ll actually have people LIVING in them, which was the goal of all this government intervention.

Prices at the bottom end of the market will not decline. Pipe dream. Naïve. NDP faerie dust- Garth

The country has been compromised economically and the citizens are too stupid to understand that.

Distracted by societal nonsense like gender studies while their futures have been robbed from them and their critical thinking abilities have been neutered to the point that they don’t even see the dynamics at work against them.

In the first 3 months of this year, I f I recall correctly, there have been 50,000 government hires. At $ 100,000 / year total compensation cost, that is $ 5 Billion a year in additional gov’t expense. And it is more or less permanent as gov’t doesn’t really fire people.

Truedope is borrowing and spending to keep the economy from showing the damage that his inane policies are wreaking on the Canadian economy.

When all the Lefties and SJWs have spent this country into a black hole, then and only then, might Canadians wake up to what has happened to their country and their futures.

And it won’t matter then as it will be too late.

Hope all these horny house buyers are happy with their completely irrelevant nation at that time.

“Prices at the bottom end of the market will not decline. Pipe dream. Naïve. NDP faerie dust- Garth”

So…you’re saying that speccers/flippers/etc don’t buy homes at the bottom end of the market, which would otherwise go to actual homeowners? That doesn’t sound correct.

Even IF prices don’t decline at the low end of the market, more actual homeowners will be able to buy if speccers don’t. They won’t have to compete with amateur investors with deeper pockets in bidding wars.

“but a year from now lots of people may regret not having tried a good vultch in April”

Garth I’ve been reading your blog for years

The detached houses just north of Toronto that I find to be in a reasonable shape and location cost 1.5M

I see some that cost 1.25M but they would require some work and location is farther from my place of employment. Also the 1.2-1.3M price ranges seem to be selling close to the asking price, so I doubt a large discount is possible

We are a millennial couple +1, with 160K family income
Should we buy now, so we don’t regret in 1 year?

How much do you have you saved? Job security? Pensions? More kids coming? Savings rate? Current home equity? Debts? – Garth

Bobby #99 “If I recall the 1993 election correctly, there were really two big issues. The much hated GST and the cancellation of the Sea King replacement.”

That’s not my recollection. People were pissed about the GST, but as I recall it was a personal dislike of Brian Mulroney, a series of scandals, and (I think most of all) Brian’s arrogant “rolling the dice” and provoking a separation crisis with Quebec so that he could be the one to swoop in and fix it.

I also would like to know Garth’s opinion on what would be the minimum acceptable financial situation for a person to be in a relative good position to buy a 1M$ house. I struggle with the idea to buy property above the 3xgross family income. Our family is at the +250K/year range but I cannot see us buying anything more expensive than 750K what practically put us out of the market in Vancouver and Toronto for SFH.

There is irony here. Under the first Truedeau hurtin’ Albertans hated the NEP and would not have those “eastern bastards” interfere with their provincial entitlements and so they were inclined to let them “freeze in the dark”. Under Justin Truedeau they are once again just-a-hurtin’ but now it they themselves that want to dictate the rights of another province? Who are the eastern bastards now?

Climate change is a hot-button issue. Liberal news outlets worry about the planet becominguninhabitable for humans, but conservative stations highlight any debate whatsoever in the scientific community as proof that things might not be so bad. For the sake of argument, let’s assume climate change is real. How might it affect the economy in the state where you live?

We found our data for how climate change would impact state GDP levels from a study published in the journal Science, which proposed a new model for calculating the economic impact of climate change. Researchers considered a range of different factors, like expected changes in agricultural yields, different demands for electrical use, changes in mortality rates, changes to the labor supply, damage due to a rise in sea levels and storm surges, and changes in crime rates. Basically, it’s an incredibly detailed and sophisticated model. We summarized the GDP data for each state to create a new color-coded map, revealing extreme disparities in how researchers anticipate climate change will affect different states.

The states poised to suffer the most damage due to climate change tend to have large cities located on the coasts. Florida and Texas both readily come to mind and in fact they top the list at more than $100B each in predicted losses due to impacts of climate change. Hurricanes and storm surges have already devastated multiple large cities in both states over the past several years. Houston is still rebuilding from the most recent flood and Tampa Bay barely dodgedwhat could have been absolute devastation last fall during Hurricane Irma. California comes in a distant third place at $59.6B, followed by New York at $54.7B and Georgia at $34.2B.

Top 10 States with the Most Economic Damage From Climate Change
1. Florida: -$100.9B

2. Texas: -$100.7B

3. California: -$59.6B

4. New York: -$54.7B

5. Georgia: -$34.2B

6. Louisiana: -$21.8B

7. North Carolina: -$20.2B

8. Tennessee: -$19.8B

9. Pennsylvania: -$18.0B

10. Arizona: -$17.4B

The map demonstrates a clear pattern: states on the coasts, especially in the South and Southeast, stand to lose the most as a result of climate change. Nevertheless, looking at the middle of the country,many non-coastal states will also suffer billions of dollars in damage due to climate change. It is easier to think about how warmer ocean temperatures can increase the power of hurricanes, but it can be much more difficult to understand how drought and wildfires are directly connected to climate change. Even though these midwestern states won’t have to contend with rising sea levels, they will still experience significant costs related to climate change. A couple of the states we mentioned above, for example, experience tornadoes every year and, as rising ocean temperatures will almost certainly increase their frequency and intensity, it makes sense that they will have a greater probability of hitting a major urban center. The common myth persists but it is simply not true that tornadoes “can’t” hit big cities.

All that being said, on a macro level states in the middle and western interior of the U.S. stand to lose relatively little compared to coastal areas. The major exceptions to this rule are Rhode Island ($0.2B), Vermont ($0.5B), New Hampshire ($0.6B) and Massachusetts ($0.7B). The fact that Massachusetts will be relatively unaffected is particularly remarkable, considering that Boston is located on a major harbor. Wisconsin ($0.3B) stands out as the third least impacted, thanks in large part to the Great Lakes (where there’s a near infinite amount of freshwater). The lucky residents of Wyoming and Rhode Island will be glad to know that they can be the least-concerned about climate change from an economic perspective—it bears mentioning, of course, that these are also the least-populated and physically smallest states in the country, respectively.

There is one key assumption that has to be addressed before closing our analysis, however. Long-term predictions about GDP necessarily include several leaps of faith. For example, that productivity growth will continue at its current rate and that breakthrough technologies won’t dramatically change the economy. Suppose it was 1918 instead of 2018; imagine trying to predict the macroeconomic effect of climate change by the end of the century! The country went through a second World War, tons of families bought cars, moved to the suburbs, got air conditioning, Rock & Roll, the Internet—in short, the entire economy went through several enormous transformations during the past century. Do you think the economy will adapt to climate change, or will it just shrink to the challenge?

All that being said, California experienced literally the largest ever recorded in the state in the months after this data became public. Was that just a coincidence?”

Hey 2013 peak RE know it all Mark – lots of people disagree with you, including Garth. He posted a few times that RE peaked in 2017. Only you and Ross Who agree with each other. I’m getting my mouse ready to scroll pass your long reply.

I’ve been offering below asking, but it has not been working in my favour.

Garth, do you think certain parts of the GTA will still decline prior to the June Election? If Ford comes into power and removes the foreign investors tax, will it really increase the value of Toronto Real Estate? I thought we had already established that Foreign investors were such a small part of home owners in Ontario.

Garth you should be happy you got out of politics, it really is an ugly business. I hadn’t realized Tory was behind that old ad campaign, as a conservative voter I was completely disgusted at the time. On an unrelated note, I think you are a great Canadian to recommend such a high percentage of maple in your portfolio. I flogged 1/2 of mine the day after Notley got in and the balance a few months later when I thought Mulcair had a good chance at PM. I have a very low opinion of our current leadership in BC, Alberta, Ontario, Quebec and of course Canada. My kids call me Debbie Downer, Debbie for short, I hope they’re right and that I’m being unduly pessimistic.

Climate change is a hot-button issue. Liberal news outlets worry about the planet becominguninhabitable for humans, but conservative stations highlight any debate whatsoever in the scientific community as proof that things might not be so bad. For the sake of argument, let’s assume climate change is real. How might it affect the economy in the state where you live?

_____

Its a hot button issue because GloBULL Warming is a total SCAM. Where is the “Free and Clear” Arctic? Where are the 10 foot sea level rises.

California? Give me a break. They lie about everything under the sun and are a basically their “own country” now with their Sanctuary State (criminal) status.

Its snowing and cold ALL OVER THE WORLD now even in the hottest of climates. But you won’t read about snow in the desert or iguanas falling frozen out of trees….on the Fake News.

GloBULL Warming was INVENTED for one reason and one reason only. MONEY. The criminals will make and the Govt will steal it in order to pay for trillions of dollars of un-funded pensions worldwide. Especially in Europe and Canada.

#84 Capt. Serious – in point of fact, the federal government has an excellent website where all the details one could reasonably ask for regarding CPP/OAS are posted for Canadians (& anyone else who is interested) to read. FAQ’s, even a retirement calculator for Canadians to use to figure out how much they need to set aside to live at least a basic lifestyle upon retirement. Seriously, anyone with the ability to do basic math & who has a grasp on how much cash they currently need to live on should be able to follow along & get a clear understanding of what the rules currently are & what they need to do. The facts are neither hidden nor hard to find. What does seem to be an issue for folks is accepting the facts regarding what they have to do to ensure their financial security if & when they do cease working for a living. Delaying action because you don’t like the answer you get today isn’t magically going to ensure the answer changes the next time you check the figures. If you want your nest egg to be golden so your retirement will be, you have to feed the goose!

“And that change in sentiment is that it is ok to have debt as long as you get what you want if someone will give you credit to do so.“

I believe this to be wrong. The sentiment is, debt is fine as long as you can service it. And with money being so cheap, servicing debt is relatively easy for most.

I think thats what the zero debt warriors are missing. Is debt and leverage such a bad thing in a low rate environment. The sneering in these comments about all these financial illiterates with debt, are they really dummies to use leverage and cheap money to buy RE that have appreciated at an astronomical rate? Is the guy with the 800k mortage, and 2mm home in YVR that he bought with 100k down really an idiot?

I think the real financial illiterates are the folks that passed on essentially free money in order to stay debt free. I would hope at minimum all the financial experts around here that avoided RE debt have have been borrowing like crazy to load up there investments. Borrow at 3 points, return 9, that is good debt.

Check out the Erindale neighbourhood in Mississauga. Lots of good semis or detached for sale (about 700K). Close to excellent schools and only a 35 minute GO Train ride to Union station. After high school, your kids can bike to University of Toronto Mississauga campus just 15 minutes away. I have always bought RE in Toronto, but this Erindale is a bargain to be had at Toronto’s 2015 prices. After 3 lost bidding wars in 1 month, I decided to venture out west and I bought below list with no other bidders. It so good, I bet HHCE could even afford it on all his saved allowance (but of course daddy would have to chip in, especially to get rid of his long term basement dweller…lol)

“So what is this 2013 apex for identical houses? And why keep mentioning since it doesn’t make sense at least for mainstream dwellings in the two big markets in Canada YYZ and YVR.
I think this was put out by Ross Kay but without any actual explanation.”

A few one-off examples might sell for more than the 2013 plateau (yours obviously was heavily re-invested in, so we’d need to net the all-in cost of that from your resale price since we’re no longer talking of a truly individual identical property). But on average, on an individual identical property in Canada that was not subject to re-investment, the price was not any higher in the post-2013 peak era than it was in 2013.

Also you note that you didn’t actually sell the house. So how do you “know” what its value might have been? Did you make the ‘rookie’ mistake of reading to a newspaper, noting that there was allegedly appreciation since 2013, and merely multiplying your previous “house price” by that? Did you use ‘comps’ from similar houses in the similar area, many of which were tainted by related party transactions being improperly reported to the MLS as part of a broader scheme to inflate house prices — prices that simply are not available to true-arms length “joe sixpack” sellers such as yourself? Or did you use an ‘assessment’ carried out by tax collectors with an obvious conflict of interest, relying on similar flawed data that was not sales mix adjusted?

The reason why activity remained so vigorous in the post-2013 peak era in the RE markets is because people were routinely getting 20-30% “discounts” off of what they believed the price would be, as such an exaggerated view of prices existed. The reason why “inventory” remained low was that sellers were in disbelief when their Realtor had to explain the “facts of life” to them in terms of the sales mix severely inflating the Realtor “average selling price” numbers which were widely reported as “house price increases” in the papers with no mention of the dramatically shifted sales mix.

Ross Kay goes over some of this stuff in his latest TDN interview, https://www.youtube.com/watch?v=ouppUZYNwxQ . I should note that he also makes the claim of foreign participation to the tune of $10B, which is so trivial compared to the value of Canada’s RE marketplace that I find it unlikely that his methodology could actually discern a funding hole of that size. And at any event, $10B is just pocket change in a ~$2-$3T nationwide RE market.

They don’t even know the term “debt service”, let alone the dynamics of it.

Your comments about being smart enough to borrow money cheap and having a windfall in profits on their home is ridiculous. Do you think they planned this ?

Am I a genius because I gambled and won or am I still just a gambler ? They got easy credit on even easier terms and took the loan – do you really think they know anything about economics. They got lucky, just like I did on my development properties – nothing more, nothing less.

And, oh yeah, show me a 9 % return with no capital risk that I can borrow at 3 % for.

That’s not cheap, none of the people who bought at a house from late 2014 to 2017 for 2% – 2.5% can afford their homes when rates are 4% – 4.5%. Especially when you add the HELOC full of crap that have no resale value and investment properties that don’t have their entire monthly housing costs paid by the tenant, so the landlord has to chip in.

How many mortgages in the GTA are with alternative lenders that are on the edge of default because the rates are high and about to go higher when they renew?

#131 D_B on 04.24.18 at 10:02 am
We are a millennial couple +1, with 160K family income
Should we buy now, so we don’t regret in 1 year?
…
#134 D_B on 04.24.18 at 10:34 am
Saved:
1.32M CAD
…
Pension:
CPP and 200K in our RRSP
…
No debts
+++++++++++++++++++++++++++++++++++

Let me get this straight:
– A Millennial, so max 37 years old.
– Family income of $160K/year
– With $1.32M in outside savings, and $200K RRSP, and no debts…

Outside of a humongous inheritance, this guys is either the greatest investor the world has ever known, or is severely stretching the truth…

…anyways, if true, I think buying a house in the $1.5-$1.6M range seems eminently doable, if you really want to lay down some roots into one spot for the next 10-15 years.

#146 RE Investor on 04.24.18 at 2:48 pm
Check out the Erindale neighbourhood in Mississauga. Lots of good semis or detached for sale (about 700K)
—————————————————————
Yes, it is a very desirable this area for those sophisticated Indian/Asian investors. How about 400k if you have any motivated sellers? Or they would rather wait for 2019 prices.

Janine Jackson: It is impossible, really, not to connect two recent pieces of news: Residents of Flint, Michigan, have been told that the state that poisoned their drinking water will no longer provide them free bottled water. They’ll be going back to paying some of the highest prices in the country, some $200 a month, for water that may still be making them sick. The Washington Post reports at least 12,000 homes in Flint still waiting for replacement of lead pipes.

At the same time, Michigan approved a permit letting the Nestlé Corporation pump more fresh water out of a well in the Great Lakes Basin to bottle and sell at a profit, more than half a million gallons a day, the right to which will cost Nestlé…wait for it…around $200 a year. And that won’t increase, although the amount of water they are taking will — by 60 percent.

#152 PastThePeak on 04.24.18 at 3:49 pm
#131 D_B on 04.24.18 at 10:02 am
We are a millennial couple +1, with 160K family income
Should we buy now, so we don’t regret in 1 year?
…
#134 D_B on 04.24.18 at 10:34 am
Saved:
1.32M CAD
…
Pension:
CPP and 200K in our RRSP
…
No debts
+++++++++++++++++++++++++++++++++++

Let me get this straight:
– A Millennial, so max 37 years old.
– Family income of $160K/year
– With $1.32M in outside savings, and $200K RRSP, and no debts…

Outside of a humongous inheritance, this guys is either the greatest investor the world has ever known, or is severely stretching the truth…

…anyways, if true, I think buying a house in the $1.5-$1.6M range seems eminently doable, if you really want to lay down some roots into one spot for the next 10-15 years.

—

funny i thought same about mil. revs. but they made it thru brute force.

“He’s a rabid right-winger, at least in fiscal terms, and says he’d scrap the 15% go-home tax as discriminatory and ineffective.”

Gartho baby… if the foreigners are not an issue… the 15% go home tax wouldn’t have affected the housing prices to begin with.
By the same token…removing 15% for the non-issue foreigners… would not affect prices either.
..statements based on the formula :
15% X non-issue = non-issue
…when “non-issue ” is very very small :)

..did mr new guy said anything about NOT taxing the owners for diversified uses of their momes ? ..like B&B?
Probably not. :)

Good ol’ Airbus Brian introduced the GST (tax on tax) in 91. When the libs came back they were elected under the “get rid of the GST” platform.
I remember that ,…as a good ol’ east european that communism taught me all that is to know about corruption and power, I was laughing at all those jokers that went to vote on that issue.
A government will NEVER eliminate a tax once it was instituted.
Take that to the bank !
…so the new Ford joker promised something that it doesn’t cost him anything to promise nor change anything if somehow he goes ahead with.
It doesn’t matter who comes in power: INTEREST RATES and DEBT are the two most important thing in ANY type of economy.
Commies were/are calculating the bond values by the same formulas the capitalist are. They are/were calculating the interest rates the same way…and were using the law of compounding interest all the same.

Regarding the State intervention in the economy… Norte Americanos have nothing to teach the Committee of Central Planning of old.

There’s something that has been in the back of my mind for some time now. And while it pre-dates the Facebook fiasco, that situation certainly brings it to the forefront. Increasingly, it feels like people in our industry, the tech industry, are losing touch with reality.

“Outside of a humongous inheritance, this guys is either the greatest investor the world has ever known, or is severely stretching the truth…”

No inheritance

Other than the fact that the 200K RRSP is included in 1.32M this is accurate

Income and savings rate were higher before but it is about accurate right now

Other then renting/saving/balanced portfolio and listening to occasional advice by Garth (like preferred, USD/CAD) nothing special was done

“…anyways, if true, I think buying a house in the $1.5-$1.6M range seems eminently doable”

Doable. yes
However, after reading this blog for years, following the advice and the math, I cannot bring myself to invest the entire capital + several hundred thousands of debt just to buy a house in northern part of the GTA which seems to be quite bad investment

I mean 3k rent per month on 1.6M house with 7K property taxes gives you about 1.8% per year

Proof – if you think buying a family home in a nice area with cheap money and leverage is the same as putting 50k down on black I understand why you are so frustrated. If all you see around you is dummies doing better then you, you may want to reconsider who the dummy is.

And no, I don’t know any investments that return anything decent and come with zero risk. If thats how you approach investing or home ownership well good luck with that

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The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.